The acquisitions of Lufthansa are managed as largely autonomous companies within the group. There are substantial differences between Lufthansa and Germanwings organisational structure and these differences mainly stem from the sizes of respective organisations. After introducing the 707 in October 1958, Pan Am wanted a jet 2 1 ⁄ 2 times its size, to reduce its seat cost by 30% to democratize air travel. 5.3 Negative Impact of Differences in Organisational Culture 12 Lockheed originally built this airframe for Trans World Airlines (TWA) in 1957. All in all, the trademark will gain lightness and elegance. Lufthansa is 78 y… Nevertheless, as it is the case with any type of financial investment, acquisition of Germanwings by Lufthansa is associated with the risks of not being able to generate desired output. The literature on strategy evaluation has been dominated since the 1950s by rational/economic assessments of strategic logic. Acquisition of Germanwings has allowed Lufthansa to increase its market share to a significant extent that this has had a positive correlation with the level of revenues. The familiar blue-yellow color combination of Lufthansa will also be retained - but the use of these primary colors will be redefined. Lufthansa resumed dividend payments of €0.50 per share for 2015 after halting them in 2014. It includes a number of independent group and affiliated companies with business segments in passenger airlines, logistics, aircraft maintenance, catering, tourism and IT services. Lufthansa top level management has recently announced a major re-branding and restructuring initiatives in relation to its Germanwings arm. This small mosaic part is of strategic importance to Lufthansa. They are defined by their strategic relevance and competence fit with the Passenger Airline Group. LUFTHANSA/ SN AIRHOLDING Only the English text is authentic. This strategy has proved to be effective in a way that Lufthansa traditional core competitive advantages have not been compromised after the acquisition. 7. According to this framework, traditional Lufthansa core competency has been closely associated a differentiation business strategy through offering a high quality service in premium prices. Strategic Logic, Cultural Fit, Research Evidence (i) Strategic logic. The report starts with analysis of motives for choosing acquisition method among other alternatives by Lufthansa. Lufthansa and Deutsche Bahn are focusing on the rapid expansion of joint train-to-flight services. These barriers are perceived to be significant and they include legal barriers, infrastructure bottleneck, strategic barriers and absence of experience in low cost airline sector (Gro and Schroder, 2007). Moreover, critics associate recent Lufthansa poor performance with ineffectiveness of strategic decision making during the last several decades, indirectly referring to the decision to acquire. Lufthansa top level management has decided to avoid merging Germanwings and Lufthansa into a single private entity, rather, Germanwings has been kept as a separate brand within Lufthansa Group portfolio. REGULATION (EC) No 139/2004 ... operate a route is a strategic business choice depending on various factors, ... catchment area, yield, fit in the network etc. The capacity on the freighter services was divided on a 50/50 basis. Our hotel partner offers you a range of accommodation worldwide at the best price. These analyses are primarily concerned with matching specific strategic options with an organisation’s market situation and its relative strategic capabilities (or core competences). Moreover, Lufthansa Group is further divided to 11 individual divisions each responsible for a specific aspect of business (Annual Report, 2011). If you have any difficulties with downloading reports you have purchased please e-mail us the details of your purchase. The data gathered for the study was examined by document analysis. In other words, there is no direct competition between Lufthansa and Germanwings due to targeting different customer segments, and thus their strategy compliment each other, making a strong case for acquisition in order to increase the overall market share to contribute to the level of revenues. 4.1 Increasing Market Share in Global Airline Industry 8 Strategy-based planning addresses both the resource allocation and organization structural issues. The manufacturer of the Trent XWB engines for the Airbus A350 pulled off a quantum leap in the process: flying one of the huge aggregates – dismantled inindividual modules – in a Boeing 777F. One of the most significant risks associated with the acquisition of Germanwings by Lufthansa relates to the risks of financial resources invested in the project. 8 were here. But he was more coy on whether Norwegian would be a good fit for Lufthansa. Therefore, from product and customer perspective it can be stated that there is a high level of strategic fit between Lufthansa and Germanwings. Mergers, acquisitions and formation of alliances are commonplace in global airline industry and they are fuelled by the search of competitive advantages in order to achieve long-term growth. Components of organisational culture include group norms, company values, organisational philosophy, ‘unwritten rules’, embedded skills, mental models and others (Schein, 2010). 1. Synergy is “the increase in performance of the combined firm over what the two firms are already expected or required to accomplish as independent firms” (Sirower, 1997, p.19). The extent of strategic and organisational fit between Lufthansa and Germanwings plays an important role on the performance of Lufthansa Group upon the completion of acquisition. Specifically, commenced in autumn of 2008, the process of negations and acquisition of Germanwings have taken only four months, completed by January 1, 2009 (Pper and Kupper, 2012). Synergy can be achieved to benefit Lufthansa Group through combining skills and capabilities within the two companies in order to increase the levels of operational efficiency and achieve higher level of cost reduction with economies of scale and other relevant measures. At Lufthansa Consulting, he managed a variety of business development projects for airlines worldwide. Add file(s) View added file(s) Printing. Figure 3 Porter’s Generic Strategies (1985) 11. Specifically, during the first quarter of 2012 alone Lufthansa has reported a loss of EURO 381 million (GBP 500 million), a significant detrimental change in company performance compared to the loss of EURO 169 million during the first quarter of 2011(Deckstein, 2012). There is an attractive potential for Lufthansa to increase the levels of revenues of Lufthansa Group and achieve cost reduction through synergy in relation to its acquisition of Germanwings. Acquisition usually takes considerably less time as compared to mergers or strategic alliances. This is followed by discussions of strategic and organisational fit between Lufthansa and Germanwings. Founded in 1990, eXcent, a conceptor and integrator of industrial solutions, supports the industrialization projects of the largest contractors in the aerospace, automotive, railway, energy, defense space or naval industries. According to the official company website “on 1 July 2013, the ‘new Germanwings’ will launch a completely new brand and product concept allowing all passengers to enjoy ‘a la carte flying’” (About Germanwings, 2013, online). We speak to UAV supporters like manufacturers, users, policy makers as well as to companies … The major risks include financial implications, compromising core competitive advantages of Lufthansa to a certain extent, and negative impact of differences in organisational culture between Lufthansa and Germanwings. (2012) “Monetary Policy and Unemployment: A New Keynesian Perspective” CCBS Workshop, Gro, S. & Schroder, A. 4. Appendix B: Merger/Acquisition Options 22, Illustration of Figures At the same time, continuing economic challenges within the European Union, the US and other parts of the world (Gali, 2012) may be interpreted as a triggering factor for the popularity of budget airlines to further increase. The merger between two telecommunication companies Alcatel and Lucent to form Alcatel-Lucent in 2006 can be mentioned to illustrate this point. As a Lufthansa customer, enjoy exclusive benefits with our partners. Airplus in 2020 posted an adjusted loss before interest and taxes of 146 million euros as bookings were wiped out in the pandemic, compared to a year-earlier profit of 2 million euros. In the future, it will be slimmer and fit for the digital world. Integration of various business processes is perceived to be easier in acquisitions as compared to mergers and alliances mainly due to the lack or absence of arguments within top level management. The ques tion of value: Do a fi rm's resources and cap bilities e nabl e th comp y o res pond to environmental threats or opportunities? Over more than a decade we have been empowering managers to make their strategic decision making more anticipatory, agile and robust. Lufthansa Cargo has a clear strategic advantage with the Pharma Hub in Frankfurt". Berufsbegleitende Aus- und Weiterbildung. In summary, Germanwings acquisition initiative has proved to be strategically affective move for Lufthansa so far, with the latter company systematically increasing the levels of its market share through this acquisition. Petter Stordalen and private equity firms Altor and TDR Capital has agreed to buy the assets of the bankrupt carrier. 2.1 Short Time Required to Complete the Acquisition 2 The report is concluded with assessing outcomes relative to expectations in relation to this specific airline acquisition. The following layer in management hierarchy comprises CEO Lufthansa German Airlines, Chief Officer Group Airlines, and Chief Financial Officer that report to Mr. Franz. How can I use the report to complete my academic assignment/research? The need for a firm's strategy to be consistent with its vision, mission, and culture b. Assistive devices/outer garments don't count as personal items. “Takeovers are always a question of strategic value, the price and anti-trust,” he said. The literature on strategy evaluation has been dominated since the 1950s by rational/economic assessments of strategic logic. The challenges facing air transport have become increasingly complex, yet Lufthansa has always found the strength to learn and renew itself. Lufthansa, maison mère de la compagnie aérienne Germanwings dont un avion s'est écrasé fin mars, réfléchit à des examens médicaux surprise pour les pilotes, qui permettraient de déceler une prise de médicaments régulière, de type anti-dépresseurs, selon son patron. Germanwings organisational structure, on the other hand, with only 1,406 employees and 25 aircrafts before the acquisition was less complicated with fewer management hierarchies as compared to Lufthansa. In 1965, Joe Sutter left the 737 development program to design the 747, the first twin aisle airliner. The Strategic and Organisational Fit between Lufthansa and Germanwings 5 Importantly, this revenue has been generated through carrying 7,522 thousands passengers, which is a decrease of 2.7 per cent from the previous year (Annual Report, 2011). New product in this specific case, relates to no-frills budget airline services offered by Germanwings. & Kupper, V. (2012) “Low-Cost Carrier Industry: A Focus on Germanwings Strategy” GRIN Verlag, Schein, E.H. (2010) “Organisational Culture and Leadership” John Wiley & Sons, Sirower, M.L. Lufthansa resumed dividend payments of €0.50 per share for 2015 after halting them in 2014. Thomas Cook Airlines Scandinavia has been rescued. Although, Lufthansa has been operating in airline business for several decades the company skills inventory lacked competencies and experiences in dealing with budget airline, and this gap has been eliminated with the acquisition of Germanwings.
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